Clean Energy Investing from the Ground Up

Forty-two days after Hurricane Maria swept through Puerto Rico, over two-thirds of the island remains without power. According to the Government of Puerto Rico, 67% of residents have not yet regained electricity and almost one in five households still do not have access to clean drinking water. The gravity of this storm has begun to sink in, as aid has been inadequate and slow to come. Reports have noted, “even six months is a generous estimate for full [electric grid] restoration,” stating, “lengthy service interruptions and the second-highest rates in the U.S [were] long the norm for Puerto Rico’s energy users even before Maria did major damage to the island’s grid.”

“Repairing Puerto Rico’s power grid could cost upward of $5 billion. However, according to David Yeh, a Managing Director at Capitol Hill and a Senior Advisor to Opus One Solutions, a game-changing grid modernization software company, “the big opportunity is not to rebuild but to build better- using today’s best technologies and practices, not the 20th century’s. This means resilient, distributed, and low carbon infrastructure including microgrids for critical infrastructure such as water treatment plants and hospitals.

The need is imminent to modernize the electric grid throughout Puerto Rico and the rest of the United States. Access to clean energy not only delivers reduced carbon emissions and strong environmental benefits, it also creates more resilient cities and strong social impacts, with those in low-income and rural communities typically the last to regain power after disasters of this magnitude.

Helping Puerto Rico evolve to a clean energy grid involves driving capital towards business models and technologies that are thinking long-term. These business models will ultimately prove successful; potentially building distributed energy grid leaders, and paving the way for widespread use of renewables and microgrids. In times of crisis, government agencies and utilities often choose the most direct and quickest course of action, overlooking the need for innovation and a holistic rebuild. However, there is a big opportunity to not only rebuild but to innovate and rebuild better, providing a space for corporations, such a Tesla, and other industry leaders, who often yield great political power and sway as well, to become involved in private-public partnerships. Tesla has announced it will “increase battery production for Puerto Rico & other affected areas,” having already used its solar panels and batteries to restore reliable electricity at San Juan’s Hospital del Niño, the children’s hospital.

Distributed energy services, software companies, and finance companies offer strong growth stage investment opportunities for smaller scale impact investors looking to create both environmental and social impact. Software services engaged in innovating the electric grid are a better fit for family offices looking to break into the field. Many of these companies produce useful analytics that will ultimately shape the field of energy storage and use, as utility companies are often unaware of where energy is being used within its own grid. We also see an opportunity for increased social impact through financing the implementation of microgrid technologies, as marginalized and rural communities are often the last to receive the needed resources and regain electricity after natural disasters. It is more economically feasible to build a microgrid for a small Puerto Rican hillside village of 30-40 households than to begin these endeavors on a larger scale.

A number of impressive business models are proving successful and are in the need of additional capital. With the right due diligence, grid modernization and stabilization provides a great opportunity for impact investors to both invest in the future energy economy and at the same time build resilience against natural disasters to come.